The tenant fee ban: get ready
The Tenant Fees Act 2019 bans many letting fees and caps deposits paid by tenants in the private rented sector . Here are some of the changes landlords and lettings agents should be aware of.
The Tenant Fees Act 2019, known colloquially as the tenant fee ban, applies to new or renewed tenancy agreements, student lets or licences to occupy housing that were signed on or after 1 June 2019. The Act explicitly lists the payments landlords and letting agents are permitted to charge their tenants in relation to new contracts; if it’s not on the list, the landlord can’t lawfully charge for it. The transparency afforded by the Act means tenants can see upfront how much a particular property will cost them to rent.
So, from now on, among the payments that can be levied at tenants in relation to new contracts are rent, dilapidation and holding deposits, default fees and utility bills. The Act follows the implementation of similar legislation in Scotland and the Renting Homes (Fees etc.) (Wales) Act 2019 in Wales, which came into force on 1 September 2019.
Landlords and lettings agents will now be responsible for the costs associated with setting up, renewing or ending a tenancy, and as a result, the move has been welcomed by tenants who have previously been hit with excessive fees for references, credit checks and other administration tasks.
“The aim of the Act is to make renting homes more accessible and affordable for tenants,” says Gemma Richards, an associate at Barlow Robbins Solicitors.
Key points for landlords
Understanding the responsibilities will be key for landlords and letting agents looking to avoid any fallout from the legislative changes. For tenancies signed on or after 1 June 2019, the only permitted charges landlords or lettings agents can levy on tenants include:
- rent
- a refundable tenancy deposit capped at no more than five weeks’ rent where the total annual rent is less than £50,000, or six weeks’ rent where the total annual rent is £50,000 or more
- a refundable holding deposit capped at no more than one week’s rent
- payment in the event of default (for instance, in relation to the replacement of a lost key/security device or late payment of rent), where required under a tenancy agreement
- payment in the event of early termination of the tenancy at the tenant’s request
- payments capped at £50 (or reasonably incurred costs, if higher) for the variation, assignment or novation of a tenancy (where a new individual assumes an obligation to pay that which was incurred by the original party to the contract)
- payments in respect of council tax, utilities, TV licence and communication services
“If the tenant loses the keys, they will be liable for the cost of the replacement,” says Natasha Willis, head of property management at Aykroyd & Co. “And if the tenant causes any damage to the property, the costs will have to be pursued through the deposit.”
“The aim of the Act is to make renting homes more accessible and affordable for tenants”
Gemma Richards, associate, Barlow Robbins Solicitors
Temporary exemptions
Where a tenancy agreement, student let or a licence to occupy housing was entered into before 1 June 2019, landlords and lettings agents will still be able to charge fees until 31 May 2020, but only where there is provision for this within existing tenancy agreements.
However, from 1 June 2020, the ban on fees will apply to all applicable tenancies and licences to occupy housing in the private rented sector. From this point, landlords and letting agents will not be able to charge any fees other than those expressly permitted under the Act.
Ensuring awareness
If landlords or lettings agents charge fees unlawfully or fail to return a holding deposit when they should lawfully do so, they will be prevented from evicting a tenant using the Section 21 eviction procedure.
A breach of the Act could constitute a civil offence – with a financial penalty of up to £5,000 – or a criminal offence if a further breach is committed within five years of the imposition of a financial penalty or conviction. The penalty for the criminal offence is an unlimited fine.
In circumstances where an offence is committed, local authorities may impose a financial penalty of up to £30,000 as an alternative to prosecution.
Landlords and lettings agents could be subject to further financial penalties if they fall foul of individual requirements described in the Act.
Seeking advice
If, as a landlord or lettings agent, you’re in doubt about the correct approach to take, it’s now more important than ever to seek independent legal advice for more information on the changes imposed by the Act.
“For peace of mind, either instruct a solicitor to consider your particular circumstances or a reputable lettings agent to deal with the paperwork,” says Richards.